MEDIA RELEASE: Many North Carolinians earn too little due to boom in low-wage work

The Budget & Tax Center’s Living Income Standard finds many families do not earn enough to afford housing, food, child care, and other necessities

RALEIGH (June 9, 2014) — One in five North Carolina families earn too little to afford life’s essentials and move up the economic ladder, according to a new report from the Budget & Tax Center, a project of the NC Justice Center.

“The ability of working families to make ends meet is fundamental to building a strong middle class in North Carolina,” said Alexandra Sirota, Director of the Budget & Tax Center and co-author of the report. “Far too many North Carolinians are struggling amidst rising costs and the boom in low-wage work which impacts the strength of the state’s overall economy.”

The Budget & Tax Center’s Living Income Standard (LIS) for 2014 finds that a North Carolina family of two adults and two children must earn $52,275 annually to afford housing, food, child care, health care, transportation, and taxes, among other necessities. More than one-third of such families earn less than that, the report finds, and more than three-fourths of families with one adult and two children fall below the standard, which varies by family size.

Under the outmoded but official federal measure of poverty, a family of four would only be classified as needy if it earned less than $23,550. However, the Federal Poverty Level doesn’t take account of expenses such as child care or regional differences in the cost of living, the report said. The 2014 LIS shows how short measures like the Federal Poverty Level and the federal minimum wage fall in reflecting what is actually needed to make ends meet in North Carolina.

“The LIS provides a clearer picture of the true extent of the challenges facing a growing number of North Carolinians, which can help guide policymakers in their efforts to create more ladders to the middle class and widespread prosperity,” said Tazra Mitchell, Public Policy Analyst with the BTC and co-author of the report. “Restoring the promise of work in well-paying jobs with benefits is the central challenge confronting our state as we map our course out of the Great Recession.”

In order to meet the LIS, adults in an average four-person family would need to earn a combined $25 an hour, working full-time. Yet if current employment and industry trends continue, the report said, fewer jobs across the state will meet this wage standard. North Carolina has seen an explosion in jobs that pay wages below the LIS and a loss of jobs in industries that pay wages above the LIS.

Policymakers have the tools to help create well-paying, high-quality jobs that pay wages that allow workers to support their families, the report said, including:

Raising the minimum wage and ensuring that wage standards are enforced.

Ensuring that work pays for everyone by reinstating the state Earned Income Tax Credit, which would boost the incomes of low-wage working families in North Carolina.

Requiring all taxpayer-supported jobs to meet a living income standard and provide benefits that can support retirement security.

Investing in education at all levels and ensuring that workers can get skills training.

Encouraging private businesses to pay a living wage and receive voluntary certification.

“Simply too many hard-working North Carolinians earn too little to support their families,” Sirota said. “Without focused attention on policies that create quality, well-paying jobs, the promise of work for these families will continue to fall short. And without strong income supports and investments in the skills and education of the current and future workforce, the potential for North Carolina’s low-wage workers to advance to the middle class will continue to be thwarted.”